Most CFOs have run into this problem: they wait endlessly for employees to submit expense reports, and then they’re blindsided by charges that go beyond what the company has budgeted for. What’s the solution? Is it better to have employees use their personal credit cards for company expenses—even though management won’t know how much liability is outstanding until expense reports are submitted—or should employees be given corporate cards, providing real-time transparency around exactly how much is being spent, and where?
Emburse Co-founder, Roger Gu, says that’s exactly the dilemma his company wants to solve. “We founded Emburse because we saw a need to simplify and rethink the way companies manage expenses,” he explains. “We didn’t think it made sense for companies to reconcile expenses only after a transaction was complete and the money had already left their bank account.”
Corporate vs. Personal Cards
In the process of building their platform, says Gu, “We spoke with dozens of CFOs about how they decide between personal and corporate cards.”
Personal cards, Gu reiterates, have the advantage of adding accountability: employees are using their own funds and must wait to be reimbursed, which discourages overspending. “The drawback was that until employees submitted expenses, often weeks late, the company had no idea how much liability was actually outstanding.”
Corporate cards, while giving CFOs immediate insight into how much is being spent, encourage overspending, since employees aren’t, even temporarily, liable for their expenditures. “We wanted to build a way for companies to enable their employees to spend for corporate purchases, but still maintain full, real-time transparency.”
Turning a Binary Decision into a Spectrum of Choice
Rather than deciding between two unsatisfactory options, Emburse gives companies what Gu calls “a spectrum of choice.”
Using the Emburse platform, corporations can assign virtual or physical expense cards to employees or contractors, while still regulating spending in several ways. These include time restrictions (limiting when employees can use the card), implementing a budget or allowance that controls how much can be spent, and/or applying merchant requirements that restrict spending to certain types of retailers.
“We wanted finance departments to be able to delegate spending in a controlled, transparent way for all employees,” says Gu. “Cards can be set up with very strict or very lax rules, and those rules can be changed on a team-by-team or month-by-month basis, depending on the needs of the company at any given moment in time.”
Emburse’s innovative technologies around card controls allow employers to set spending limits before ever giving an employee a credit or debit card. Should employees discover that they need more flexibility, they can request budget changes through the platform. “This allows companies to maintain full transparency into expenses, without waiting for weeks after a transaction, when employees finally submit their receipts,” says Gu.
The Pitfalls of Corporate Cards
Gu explains that corporate payment cards do two things poorly. First, “There’s no correlation mechanism for overspending—whether it’s accidental or fraudulent.” And second, “If someone puts a corporate expense on their personal card, there’s no reimbursement mechanism.”
Emburse addresses this problem in two ways. First, they allow split payments. This holds employees accountable for their spending, which Gu says “is important even if there is 100 percent trust between employer and employee.” Second, Emburse offers card reimbursements. “If someone does spend $100 more than they’re supposed to, even in error, you don’t have to just excuse it or ask them to write a check,” Gu explains. “Emburse will sort it out seamlessly by charging the cardholder’s personal account and reimbursing the company.”
On the other hand, sometimes it’s necessary to reimburse employees—for example, if they accidentally use their personal card for company expenses. This is a common pitfall with auto-fill features when making purchases online. Emburse can solve the problem without the need to use another platform, such as Expensify or Concur.
Becoming a Full Corporate Expense Platform
While Emburse can’t eliminate the need for expense reports, they can make the budgeting and reimbursement process easier. Using the platform helps companies stay on budget by allowing them to use a separate expense card for all transactions belonging to a particular team, client or expense category.
Bookkeeping is also simplified with Emburse because all transactions are automatically labeled. “Our clients are able to customize tags to suit their specific needs. Companies often want a way to differentiate spending between separate arms of their business; these auto tags are a very convenient way to track expenses,” says Gu.
Emburse doesn’t just want to provide a solution for how companies handle the corporate vs. personal payment card dilemma. The company is on track to become a full corporate expense platform, says Gu. “We strive to be the leader in technology through features like single-sign-on, Slack integration and multi-card budgeting support.”